The Friendship Portfolio: Which of your friends are too taxing and which yield a good return on your investment?

The Friendship Portfolio: Which of your friends are too taxing and which yield a good return on your investment?

Stressed out over money? You’re in good company. Approximately 99 percent of your fellow countrymen are. There’s nothing quite like the double-whammy of the IRS tax filing deadline and presidential year politicking to get everyone thinking about how rich or poor they are.

But I have some good news for you. When you size up your investment portfolio, there’s a pretty good chance you’re overlooking at least one very valuable set of assets. You won’t be able to cash it in to cover your next mortgage payment, but studies show it can make you happier, healthier and result in a longer life.

What I’m referring to here is your friendship portfolio.

There are many different types of wealth in the world. Even when using a traditional definition, if you only counted the dollars in your bank account and ignored your mutual funds, your retirement account and the equity in your house, your financial picture would be incomplete.

And anyone who has ever read one of those People magazine stories about lottery winners whose lives later devolve into chaos and despair knows that money does not guarantee a rewarding life.

So I’m not just being a Pollyanna when I say that it makes sense to broaden your definition of wealth to include things like friendship, health, intellectual enrichment, and spiritual and emotional reserves. When you use a more inclusive definition, you come away with a picture that’s both healthier and more complete.

Just like traditional investments, when it comes to friendships, some are more rewarding than others. But how do you assess the value and quality of friendships? To assist in this endeavor, I offer you the following analysis of the two most common models of friendship and the risks and rewards associated with each.

The Group Friendship Fund

The GFF model features friends who are bundled together. They all know each other and they tend to travel in a pack. Sorority sisters and fraternity brothers are common examples. The group nature of this model yields rewards that compound daily. There’s always a party somewhere, and if you ever need an army of support, it’s usually just one phone call away. The benefits of a GFF are never more obvious than when you have to move. With a GFF, the heavy lifting part of the move is over and you’re all drinking beer and eating hot wings before you know it.

But while the rewards from this model can be big, so are the corresponding risks. A person in a GFF is often reluctant to be honest with another friend in the same group out of fear that if she says something that offends that one friend, the entire group might take sides. And if she ends up on the wrong side of group consensus, she could lose her entire social circle and have to declare social bankruptcy.

Another downside to the GFF model is that the importance given to the group as a whole leads to a lot of “group think” and talking behind the backs of other members. While the purpose of all this talk is ostensibly concern for the member being discussed or the need to determine the group’s collective opinion of the matter at issue, it often ends up sounding (and feeling) more like gossip than concern — especially since all the talk rarely results in any group action.

I’ve seen “friends” in a GFF engage in a lot of hand-wringing and tongue-clucking about another member of the group who was drinking way too much, having an affair or otherwise making a mess out of her life. But while everyone agreed someone should really talk to her about their concerns, no one had the guts to do it. Instead, they all talked a lot about her, but not at all to her, as her personal and professional life circled closer and closer to the drain.

With friends like that….

The Individual Friendship Account

A friend that is set up as in an IFA is not connected to your other friends. Think of IFAs as spokes on wheel with you in the middle. The advantage of an IFA is there is more opportunity for honesty on both sides of the equation. You can share things with an individual friend without being concerned that it will be broadcast to the entire group. And if you give your honest opinion to a friend in an IFA and she gets mad at you, it may cost you that friendship but you don’t stand to lose your entire support system. This increased honesty means that stronger and deeper friendships tend to develop in an IFA than in a GFF.

The downside to IFAs is they take more effort to maintain and you don’t get the compounding effect that a GFF offers. Catching up with five friends who are each in an IFA takes at five phone calls and five separate get-togethers. Catching up with five friends in a GFF takes one group text and a Thursday night happy hour at Hula Hut.

There’s also a rare but nonetheless serious potential risk with IFAs: If you have a friend in an IFA, you tend to feel at ease talking about her to other friends because they do not know each other. In this way, it doesn’t feel like gossip, but rather an opportunity for you and your friend to discuss your respective views on the other friend’s goings on.

In other words, it’s more of a human interest story. But if those two friends later become friends themselves, the three of you are suddenly bundled together in a de facto GFF and any sharing you did in the past puts you in a precarious position. If the two friends compare notes, it could result in your being defriended by both friends and exiled from the de facto GFF altogether.

I’m speaking from experience here. My friend Tessa was married to someone who was in a well known rock band. Her husband was having an affair while he was on tour and, because I wasn’t connected to anyone else in her life, she used to confide in me about the situation. I had another friend Allie who was a chiropractor. I had told Allie about Tessa and her struggles. I hadn’t given any specifics, but Allie knew that I had a friend whose husband was in a band that toured a lot and that he was cheating on her. And because they didn’t know each other, I was more candid with Allie about my frustration when Tessa put up with B.S. that I thought she shouldn’t.

In a bizarre coincidence, Tessa ended up getting a job as a receptionist at Allie’s chiropractor office. Once Allie learned that Tessa’s husband was in a band, it didn’t take long for Allie to realize that she had heard this song before. Suddenly I was singing lead vocals — without the benefit of back-up singers or even a band — in the “friendship edition” of Justin Timberlake’s “What Goes Around, Comes Around.” No one asked for an encore.

So, which friendship model is better?

As it turns out, it’s a tie. In the final analysis, an ideal friendship portfolio would be diversified, with one or two GFFs and a handful of IFAs. And whether your portfolio has a heavier concentration of one model than the other will likely depend on your personality — how outgoing you are, if you prefer depth to breadth, and your tolerance for risk.

Regardless of whether it’s a GFF or an IFA, healthy friendships are a two way street. In the normal course of things, there should be plenty of occasions to both give and receive support. If you notice that there is a historical imbalance on either the giving or receiving end of a friendship, take steps to correct it. And if you find yourself burned out by a friend who is always a taker and never a giver, it’s okay to withdraw your energy from that friendship and start investing in one that yields better rewards.

One last tip

Don’t fight the natural ebb and flow of friendships. If you are going through something tough and you notice that a friend with whom you have previously been close is suddenly nowhere to be found, it’s easy to conclude that your friend bailed on you not only in spite of your struggles, but worse yet, because of them.

But correlation isn’t the same thing as causation. And I learned that the hard way, too. When I was going through my divorce, I had a friend that suddenly didn’t want to have a thing to do with me. After a couple of attempts to reach out to her, I concluded that she was either one of those people (and there are a lot of them) who viewed divorce as a communicable disease, or she disapproved of me for getting a divorce.

I went on with my life, but thought less of her because she had bailed on our friendship at a time when I really needed support.

Months later I found out what really happened. At the same time I was going through my darkest days, she had learned that her husband had been going all Eliot Spitzer on her while he was away on business trips, hiring expensive call girls and blowing through large amounts of their community cash. She is an intensely private person and was reeling in the wake of this discovery.

The moral of the story is this: Your friendship roster will change over the course of your life — and that’s okay. Sometimes there’s a specific reason, sometimes there’s not. Sometimes you know the reason, sometimes you don’t. Rather than dwelling on it, remember what was good about that friendship, and move on. Don’t characterize it as a loss; view it as an opening on your roster for a new friend.

So, after you figure out how much money you owe Uncle Sam, rather than beating yourself up for not having managed your money better this past year, turn your energy to something that promises a better return.

Take a look at your friendship roster and make a date to spend some quality time with a good friend. The investment might not help your bank balance, but you will be richly rewarded in ways that really matter.